Accounting 2 Exam 1

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Articles of Partnership

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The contract between partners that specifies such items as the name, location, and nature of the business; the name, capital investment, and duties of each partner, and the method of sharing profits and losses among the painters. Also called partnership agreement

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Dissolution

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Ending of a partnership

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General Partnership

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A form of partnership in which each partner is an owner of the business with all the privileges and risks of ownership.

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Limited Liability Partnership

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A form of partnership in which each partner's personal liability for the business's debts is limited to a certain amount. Also called LLPs.

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Limited Partnership

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A partnership with at least two classes of partners; a general partner and limited partners.

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Liquidation

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The process of going out of business by selling the entity's assets and paying its liabilities. The final step in liquidation is the distribution of any remaining cash to the owners.

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LLPs

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A form of partnership in which each partner's personal liability for the business's debts is limited to a certain amount. Also called limited liability partnership.

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Mutual Agency

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Every partner can bind the business to a contract within the scope of the partnership's regular business operations.

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Partnership

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An association of two or more persons who co-own a business for profit

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Partnership Agreement

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The contract between partners that specifies such items as the name, location, and nature of the business; the name, capital investment, and duties of each partner; and the method of sharing profits and losses among the partners. Also called articles of partnership

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S Corporation

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A corporation taxed as a partnership

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Unlimited personal liability

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When a partnership (or a proprietorship) cannot pay its debts with business assets, the partners (or the proprietor) must use personal assets to meet the debt.

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Additional Paid In Capital

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The paid in capital in excess of par, common plus other accounts combined for reporting on the balance sheet. Normal Credit Balance

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Authorization of Stock

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Provision in a corporate charter that gives the state's permission for the corporation to issue--that is to sell--a certain number of shares of stock.

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Board of Directors

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Group elected by the stockholders to set policy and to appoint the officers

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Book Value

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Amount of owners' equity on the company's books for each share of its stock

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Bylaws

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Constitution for governing a corp.

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Chairperson

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Elected by a corp's board of directors, the most powerful person in the corp.

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Charter

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Document that gives the state's permission to form a corp.

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Common Stock

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the class of stock that represents the basic ownership of the corp.

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Contriubuted Capital

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Capital from investment by the stockholders also called paid in capital.

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Cumulative Preferred Stock

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Preferred stock whose owners must receive all dividends in arrears before the corporation pays dividends to the common stock holders

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Defecit

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Debit balance in the Retained Earnings Account

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Dividends

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Distributions by a corp to it's stockholders

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Double Taxation.

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Corps pay their own income taxes on corp. income. Then the stockholders pay personal income tax on the cash dividends they receive from the corp.

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Legal Capital

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The portion of stockholders equity that cannot be used for dividends

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Limited Liability

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No personal obligation of a stockholder for corporatiion debts. A stockholder can lose no more on an investment in a corp than the cost of the investment made

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Market Value

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price for which a person could buy or sell a share of stock

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Outstanding Stock

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Stock in the hands of a stockholder.

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Paid In Capital

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Capital from investment by the stockholders. Also called contributed capital.

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Par Value

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arbitrary amount assigned to a share of stock.

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Preferred Stock

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Stock that gives its owners certain advantages over common stockholders, such as the right to receive dividends before the common stockholders and the right to reveive assets before the common stockholders if the corp liquidates

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President

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Chief operating officer in charge of managing the day to day operations of a corp.

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Rate of Return on Common Stockholders' Equity

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Net income minus preferred dividends, divided by average common stockholders equity, A measure of profitability. Also called return on equity

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Rate of Return on total assets

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The sum of net income plus interest expense divided by average total assets. Measures the success a company has in using its assets to earn income for those financing the business.

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Retained Earnings

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Capital earned through profitable operation of the business. Normal Cr. balance

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Share holder

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A person who own the stock of a corp. Also called a stockholder

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Stated Value

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an arbitrary amount that accountants treat as though it were par value

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Stock

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Shares into whihch the owners' equity of a corp is divided.

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Stockholder

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A person who owns stock of a corp. Also called a shareholder

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Stockholders' Equity

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Owners' equity of a corp.

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Appropriation of Retained Earnings

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Restriction of retained earnings that is recorded by a formal journal entry

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Comprehensive Income

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Company's change in total stockholders' equity from all sources other than from the owners

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Earnings per Share (EPS)

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Amount of a company's net income for each share of its outstanding stock.

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Extraordinary Gains and Losses

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A gain or loss that is both unusual for the company and infrequent also called extraordinary items

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Extrordinary Item

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A gain or loss that is both unusual for the company and infrequent also called Extraordinary gains and losses.

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Prior Period Adjustment

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A correction to retained earnings for an error of an eralier period.

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Segment of the business

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one of the various separate divisions of a company

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Stock Dividend

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A distribution by a corp. of its own to stockholders.

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Stock Split

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An increase in the number of outstanding shares of stock coupled with a proportionate reduction in the value of the stock.

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Treasury Stock

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A corp's own stock that it has issued and later reacquired.